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CGM approved for reimbursement in Germany for patients on intensive insulin therapy; major achievement in a tough reimbursement market – June 21, 2016

Executive Highlights

Germany’s Federal Joint Committee just announced that it will reimburse CGM for people with diabetes requiring intensive insulin therapy, including type 1s and type 2s of all ages – wow! This was five years in the making and a tremendous win for patients in one of the toughest reimbursement markets in the world.

Coverage will extend to the Abbott Navigator II, Dexcom G4 and G5, and Medtronic devices (Guardian, Veo, 640G). Abbott’s FreeStyle Libre is not included in the current recommendation, presumably because it (intentionally) lacks alarms and is a separate category of device (Flash Glucose Monitoring). We hope this changes over time.

The news hopefully sets a positive precedent for future German reimbursement of diabetes technology, particularly automated insulin delivery. It also stands in stark contrast to a string of negative decisions for next-gen diabetes drugs, most recently for BI/Lilly’s Jardiance (empagliflozin) and Novo Nordisk’s Tresiba (insulin degludec).

Germany’s Federal Joint Committee (G-BA) just revealed that patients requiring intensive insulin therapy will now be reimbursed for CGM – type 1s and type 2s of all ages. Wow! This exciting announcement marks the end of a five-year push for reimbursement and a massive victory for this now maturing technology in one of the toughest reimbursement markets in the world.

This should open up adoption in Europe’s second largest diabetes population (after Russia): Germany has over 6.5 million adults and children with diabetes (10% of all cases in Europe); however, only a subset of the 1-2 million insulin users are on intensive insulin therapy. If coverage is actually feasible for type 2s, this also represents much broader reimbursement criteria than for most payers in the US – particularly Medicare, which does not cover personal CGM for even type 1s.

Dr. Lutz Heinemann, who was instrumental in pushing this through, told us that to his understanding coverage will extend to the Abbott Navigator II, Dexcom G4 and G5, and Medtronic devices (Guardian, Veo, and 640G). The news unquestionably bodes positively for Dexcom and Medtronic right now, and Roche and Senseonics’ upcoming EU debuts this year. We hope this opens the door for automated insulin delivery reimbursement, which should ideally show better reductions in hypoglycemia and mean glucose vs. standalone CGM (though likely at a higher cost).

Abbott’s FreeStyle Libre will not be covered under the new recommendations, which is unfortunate but not terribly surprising. Libre has always been positioned as a new category of device – “Flash Glucose Monitoring,” offering CGM-like data, but intentionally without alarms. That intentional design choice brings some big advantages (e.g., lower cost, less hassle, smaller on the body), but it does separate it from traditional CGM. We assume Abbott will pursue reimbursement over time, or perhaps add alarms in a separate iteration of Libre.

Dr. Heinemann told us there may still be some bureaucratic hassle, but this ruling – CGM coverage for users on intensive insulin therapy – is strikingly expansive, particularly given Germany’s recent history in diabetes drugs. Earlier this month, IQWiG issued a second “no additional benefit” ruling for Lilly/BI’s Jardiance (empagliflozin), arguing that the EMPA-REG OUTCOME results were not sufficient to establish an added benefit over standard of care. Yes, this is the same drug that actually cuts cardiovascular death by 38%! Novo Nordisk also withdrew the basal insulin Tresiba (insulin degludec) from Germany last July in response to a negative IQWiG decision.

Notably, Germany is now calling for more universal CGM coverage than UK’s NICE. As of last August, NICE’s clinical guidelines recommended CGM for the first time, but only in type 1s with lots of hypoglycemia. We were incredibly psyched to see that last year, which puts us over the moon with this excellent decision! It’s shocking to say it, but we hope more payers follow Germany’s lead on CGM – something we’ve never said about German reimbursement.

See below for more details on the news, company breakdowns, upcoming CGM launches in Europe, and our questions.

Under the previous guidelines, there was no reimbursement for use of CGM in Germany, leaving patients stuck paying out-of-pocket. Cost coverage was occasionally granted to patients who demonstrated sufficient need and successfully sued the sickness funds – not easy. As a result, very few patients that would have benefitted from CGM used it. With this news and more CGMs launching in Europe (see below), we assume the next year will see a solid uptick in the number of German CGM users.

The news is a big win for Dexcom, who saw record-high international sales of ~$19 million in 1Q16 (16% of total revenue), expects a “huge opportunity” with German reimbursement, and recently acquired its German distributor. Management said in April that reimbursement was “close” in Germany, France, and the UK, and one or more of those this year would open a “huge opportunity up.” As a reminder, Dexcom currently has reimbursement in Sweden, Switzerland, and the Netherlands, so Germany indeed expands the pie. Last month, Dexcom acquired Nintamed, its exclusive distributor in Germany, Switzerland, and Austria for the past six years. While financials were not disclosed, it’s clear that the strategic advantages will be many – most notably, more control of distribution, better margins in these countries, and less uncertainty overall. Dexcom’s new international headquarters operations in Edinburgh, Scotland were “very close” to opening, per the 1Q16 call.

Medtronic should see accelerated EU CGM sales with this news, given very strong 640G uptake already and its soon-to-launch standalone CGM, Guardian Connect (this summer). The MiniMed 640G drove impressive 30%+ growth in insulin pumps in Europe and Australia in 1Q16, continuing strong “65%” and “nearly 40%” pump growth in Europe in the two quarters before. Meanwhile, Medtronic’s Bluetooth-enabled, standalone Guardian Connect CGM is still expected in the EU in “early FY17” (~June-July 2016), per the 1Q16 call.

Roche and Senseonics also win with this news, as both could launch their CGMs in Germany this year. Senseonics’ implantable Eversense CGM, on-body transmitter, and mobile app is expected to initially launch in Scandinavia very soon (Sweden in June, Norway/Denmark in 2H16), though an exclusive distribution agreement with Roche will bring Eversense to Germany, Italy, and the Netherlands. The agreement was signed last month, though no timing details were offered – this could accelerate launch in Germany. Meanwhile, Roche’s 1Q16 call reiterated a 2016 EU launch timeline for its Accu-Chek Insight CGM; there aren’t other details to report, including which countries will be targeted. Of course, Germany is presumably early on Roche’s launch list with this news and Roche’s headquarters.

FreeStyle Libre’s lack of alarms was an intentional design choice with obvious advantages (user experience, cost, and form factor), though it apparently precludes it from coverage under this policy. Given the strong hypoglycemia data from REPLACE and IMPACT, along with the positive Libre uptake in the EU thus far, we hope coverage will expand over time. Of course, Abbott may also build Bluetooth directly into Libre, which could enable continuous communication with alarms. In the meantime, Abbott will have to settle for reimbursement of the Navigator II, for which it does not heavily promote to our knowledge. Will it begin driving sales of this product in Europe?

How might this ruling change uptake for FreeStyle Libre in Germany? On the one hand, it could raise awareness of sensors and benefit Abbott, who has some compelling advantages over Dexcom and Medtronic (factory calibration, smaller on the body, fully disposable). On the other hand, the new CGM reimbursement gives FreeStyle Libre a smaller cost advantage vs. traditional CGM, which could drive more patients to Medtronic and Dexcom. Of course, many companies MUST succeed in this field, given the low penetration and the number that can benefit from wearing a sensor.

As an aside, we’ve discovered a black market for FreeStyle Libre sensors on Ebay – sensors are going for over $100 each, with most listings coming from Germany. This is a near 100% premium over the current EU price of 60 euros per sensor.

At last year’s EASD Diabetes Technology Meeting, IQWiG’s Dr. Stefan Sauerland told us of a new law that is under preparation that will expedite the review process for “invasive high-risk devices”. Such a law would prevent the painstaking, drawn out approval process that we have just seen (in exaggerated fashion) with CGM. We wonder if this will help accelerate future reimbursement reviews of devices, particularly automated insulin delivery.

Close Concerns Questions

Q: How much bureaucratic red tape will patients and provider need to navigate? Will German CGM reimbursement go into effect immediately?

Q: How many additional German patients will adopt CGM now that it is covered? How many type 2 patients will take advantage of CGM?

Q: Will Abbott more heavily promote Navigator II?

Q: If Libre had alarms, would it be eligible for reimbursement in Germany? Will Abbott add this?